Posts Tagged ‘trailing stop loss’

It sounds good! You put a trade and once you are in profit you set up trailing stop loss and that’s it. No matter what happen, you will have profit (almost) but in my experience it is bad thing to do and you limit your profits.

This is a good idea when the market moves in one line, down or up. But it is very rare that the market moves this way. So it goes up and then down and up and down. And in the meantime your trailing stop loss can be triged, way before you want it.

I can give you an example. In September I bought Morgan Stanley at 1290 after the share droped down massively. As soon as I bought it, the share jumped to 1500 and I was happy. So I set up a trailing stop loss at 1400 that will move 100 points every 100 points the share moves up. What happened? MS went up to 1700, so my stop loss moved to 1600 then went down to 1586, so I was out, and then all the way to 2300 on the same day. The day after MS jumped to 3300 before it went back to 2700. How many points did I earn? 310. Nice? well no. It should have been 1410…

The trailing stop loss just killed my trade. I tried it two more time and faced the same results. So never again for me. But on theory it sounds good!